The PFRDA (Pension Fund Regulatory and Development Authority) has tweaked the withdrawal rules for NPS (National Pension Scheme) subscribers. The same is applicable if the withdrawal is below a specific limit. For years, people have invested in the National Pension Account and accumulated retirement funds. It is one of the safe and tax-saving investment options.
With the new changes in NPS withdrawal rules, you can make use of the pension wealth as per your desire. In this post, we will talk about the recent changes to the National Pension System.
Changes in National Pension Scheme Rules
Here are the recent updates in NPS rules:
1. Withdrawal Limit
One of the most important changes in the NPS rule is that the subscriber can withdraw the entire amount on maturity. But this has to pertain to certain conditions. The individual can withdraw 60% of the corpus from the account. The person can also use the rest of the amount (40%). This amount can be used to buy an annuity plan.
So, if you invest in the National Pension Scheme, you can opt for withdrawal if the accumulated sum in the account is up to Rs. 5 lakhs. Here, you can take out the entire pension corpus. This is possible without purchasing an annuity. You can utilize the fund as per your wish and not have to purchase a mandatory pension.
2. Increase in Age Limit
The entry age to this permanent retirement account is now 70 years of age instead of 65. The extension of the age limit for exit is 75 years. So, all the subscribers can now choose to continue the account even after the age of 60. Also, you can extend this corpus account till the age of 70.
Thus, for senior citizens, this scheme is more lucrative. Retired officials can easily save and invest funds for retirement. Also, individuals over 65 years of age can get attractive tax benefits. With the enhancement in investment tenure, you can gather more funds and use them for your benefit.
3. Deferment of Annuity
After the National Pension account matures, you can defer buying the annuity if you feel unfavorable market conditions. The deferment of pension purchase is available for up to 3 years. This is from the period when you achieve 60 years of age. Or, it is from the age of attainment of superannuation.
4. Premature Lump-Sum Withdrawal
If you need some cash in hand, then there is good news. You can now make a premature withdrawal of a lump-sum amount up to Rs. 2.5 lakhs. The previous limit was up to Rs. 1 lakh on the NPS account. This leaves you with liquid cash to meet your financial needs whenever you wish to, subject to a few conditions. Here is what you need to know:
- If the pension wealth is above Rs. 2.5 lakhs and the subscriber’s age is below the minimum age for the purchase of an annuity, then the person has to continue subscription to National Pension until the attainment of eligible age to buy an annuity.
- But if the corpus is equal to or less than Rs. 2.5 lakhs, then the individual can take out the entire amount without the purchase of an annuity.
The changes in the National Pension Scheme rules are welcome for investors. With the flexibility of withdrawal and age limit, extended premature withdrawal limit, and deferment of annuity, you can now have better control over the accumulated funds in the permanent retirement account.